Should you subscribe to JNK India’s Rs 649-crore IPO? Analysts bullish on order flow, unique product line

The price band of the issue is fixed at Rs 395-415.

JNK India Ltd’s Rs 649.47-crore initial public offering (IPO) opened for subscription on April 23, with most brokerages in favour of subscribing to the offer due to the company’s strong position among peers, unique product line and robust order inflows.

The price band for the IPO, a fresh issue of over Rs 300 crore and an offer for sale of shares worth Rs 349.47 crore, has been fixed at Rs 395-415 apiece.

Set up in 2010, JNK India specialises in designing, manufacturing, supplying, commissioning and the installation of process-fired heaters, reformers and cracking furnaces. The company has executed projects across states, including Andhra Pradesh, Assam, Bihar, Karnataka, Kerala, Maharashtra, Tamil Nadu, and West Bengal.

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Should you should subscribe to the offer? Here's what experts have to say:

Nirmal Bang is positive on JNK and recommends subscribing to the issue due to a favourable industry structure with limited competition and a strong pipeline of orders.

“JNK has delivered growth and return ratios which are superior to comparable companies while its valuation is at the lower end of the range," the brokerage said in a note. The company is well placed to capitalise on the global as well as Indian capex unfolding in the oil and gas, petrochemicals and fertilisers industries.

JNK India plans to earmark funds from the issue to fund working capital requirements and the rest for general corporate purposes.

InCred Equities, too, has a “subscribe” call on the issue, saying the global growth in petrochemical capacities is driving the demand for process-fired heaters. JNK is poised to capitalise on the demand, leveraging its engineering capabilities and established product portfolio. "The company has a healthy order book worth Rs 850 crore and a high total addressable market (TAM) in India and overseas provides revenue visibility," it said.

Reliance Securities has advised “subscribing” to the offer, citing strong order flows from diversified offerings. The company has diversified into product categories for various industries, which could help it maintain a consistent order inflow, given its increased geographical presence in high-growth markets.

Arihant Capital favours subscribing the issue for the long term. "JNK India presents a compelling opportunity for investors seeking exposure to the heating equipment sector," it said. High-entry barriers and a strategic emphasis on capitalising on global refinery expansions further solidify the firm’s investment appeal.

Choice Equity, too, advised subscribing to the IPO. "We believe there is no peer having a product-line similar to the JNK," it said, adding the company can meet the domestic demand on its own. As for the overseas markets, it has a business collaboration with JNK Global, which is among the Top 3 process-fired heater producers globally, the brokerage added.

Finances

The company's top-line continued to grow, registering a compound annual growth rate (CAGR) of 72 percent over FY21-23. Its bottom-line reported a growth at CAGR of 68.3 percent over the same period.

In FY23, the company’s revenue came in at Rs 407.32 crore, up from Rs 296.40 crore in the previous year. The oil and gas segment emerged as the primary contributor, accounting for 77 percent of the revenue.

Its net profit rose to Rs 46.36 crore from Rs 35.98 crore in the preceding year. As of the nine months ending in 2023, the company's debt stood at Rs 56.73 crore.

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